Tax regime for small businesses quite complex, says official

THE current tax regime for small businesses is quite complex, according to Samuel Loi, Internal Revenue Commission (IRC) acting commissioner of tax.
Loi was speaking at IRC’s first meeting with various stakeholders in Port Moresby yesterday about the new tax law, small business tax (SBT) that was initiated in 2019 by the Government. “When you are thinking about your small business, cost is one of the things that you worry about and want to minimise as much as you can,” he said.
“So what SBT gives you is something like a fixed cost in terms of your business cost when it comes to taxation.
“Unlike the current regime we have where, there is the different rates of tax that are applicable.
“It can sometimes become uncertain for you as a small business, what tax you are going to pay in the course of the year.
“On top of that, there are other obligations that come with it.
“The current tax that we are administering at IRC is a complex set of rules.” According to information from IRC, the SBT is a tax on turnover or gross sales. Two segments of SBT include micro-business and small business.
A sole trade whose annual turnover is less than K60,000 is considered as micro business and a small business is one with an annual turnover of K60,000 to less than K250,000.
Micro businesses pay a flat rate of K250 annually.
Tax on small business is paid quarterly.
Tax on the first K15,000 is K62.50 and any sales made in excess of K15,000 in that quarter is taxed at two per cent.